HomeWork in ProgressIn re: the Petition/Complaint of Libertad 54 Ltd, as owner of the S/V Libertad – Continued

In re: the Petition/Complaint of Libertad 54 Ltd, as owner of the S/V Libertad – Continued

Lipcon, Margulies, Alsina & Winkleman, P.A

January 18, 2013

January 18, 2013

In re: the Petition/Complaint of Libertad 54 Ltd, as owner of the S/V Libertad – Continued

Response to Motion to Dismiss

Injuries can happen on all types of vessels, including private yachts. In this case, two crewmembers on a private yacht were injured when a winch mal-functioned. Yacht crewmembers face difficulties that may not be an issue with crewmembers for larger shipping companies. Often times employees working on yacths are subject to jurisdictional challenges and limitation actions. If a crewmember working on a private yacht is injured, it is imperative that they seek the help of an experienced maritime attorney like those at Lipcon, Margulies, Alsina & Winkleman, P.A.

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAIN ADMIRALTYCase No. 11-23201-CIV-COOKE

IN RE: the Petition/Complaint of
LIBERTAD 54, LTD., as Owner of the S/V
LIBERTAD, a Cayman Islands Flagged
Amel 54’ Sailboat, Reg. No. 738533, and
DANIEL STRULOVIC, as Owner Pro Hac
Vice or Beneficial Owner, for Exoneration
from or Limitation of Liability,
Petitioner/Complainants,

CLAIMANT/COUNTER PLAINTIFFS JANE DOE AND JOHN DOE’S RESPONSE IN OPPOSITION TO THE LEWMAR DEFENDANTS’ MOTIONS TO DISMISS: D.E. 48 THROUGH 53

Comes Now, Plaintiffs JANE DOE and JOHN DOE, and hereby file their Response in Opposition to the Lewmar Defendants Motions to Dismiss [D.E. 48, 49, 50, 51, 52, AND 53], and for good cause rely on the following Memorandum of Law.

MEMORANDUM OF LAW

THE LEWMAR DEFENDANTS’ MOTIONS TO DISMISS SHOULD BE DENIED IN ITS ENTIRETY BECAUSE THEY ARE ENTIRELY UNSUPPORTED BY THE RECORD FACTS. ALL OF THE LEWMAR ENTITIES DO SUBSTANTIAL AND CONTINUOUS BUSINESS THROUGHOUT FLORIDA AND THE ENTIRE UNITED STATES SUCH THAT PERSONAL JURISDICTION IS PROPER. AND THE FORUM NON CONVENIENS CHALLENGE FAILS BECAUSE THIS MATTER HAS SIMPLY NO CONNECTION TO ANTIGUA, WHERAS THIS MATTER HAS A STRONG FLORIDA CONNECTION.

I. Overview

This lawsuit arises out of the grievous injuries sustained to Claimants/Counter-Plaintiffs JANE DOE and JOHN DOE, when a Lewmar winch, located onboard an Amel Sailboat[1], malfunctioned. The malfunction caused the amputation of JANE DOE’s left arm at the elbow and crushed her right hand and forearm. The malfunction also caused the amputation of seven of JOHN DOE’s fingers (John Doe was a good Samaritan who went to the aide of JANE DOE when the injury occurred).

The subject vessel was sold in Florida, but the accident occurred in Antigua. At the time of the incident JANE DOE was a Jones Act Seafarer. Answer to Petition, D.E. 29, 88. JANE DOE was immediately flown to Miami for emergency medical care. JANE DOE underwent extensive medical care at Jackson Memorial Hospital, including seventeen (17) surgeries. See Declaration of JANE DOE, attached as Exhibit 1.
On May 26, 2011, Plaintiff JANE DOE filed an Amended Complaint asserting Jones Act claims against Defendant Libertad 54 (owner of the subject vessel), and claims sounding in negligence and products liability against the three Lewmar Defendants. D.E. 5; Case No 11-21810.

On September 4, 2011, Petitioner Libertad 54, Ltd. filed a Petition for Exoneration from and/or Limitation of Liability, regarding the subject incident. D.E. 1.; Case No. 11-23201. The Petition included claims of contribution and indemnity against the Lewmar Defendants and Defendant Chantiers Amel, S.A. Per the Limitation Order, D.E. 9, all claims against the vessel owner must be filed in the Limitation action and all other actions are stayed.

Claimants JANE DOE and John Aghlren filed their respective Answers to the Petition. D.E. 29, 41. Said Answers include Counter and Cross claims sounding in negligence and strict products liability against Libertad 54, Ltd., the three Lewmar Defendants, and Defendant Chantiers Amel, S.A.

On March 26, 2012, this Honorable Court, pursuant to Supplemental Rule F(3) for Admiralty and Maritime claims, stayed Case No 11-21810 (JANE DOE’s original complaint) in its entirety, pending completion of Case No. 11-23201 (Limitation of Liability proceeding). D.E. 77.

Defendants Lewmar Inc., Lewmar Ltd., and Lewmar Marine Ltd., (hereinafter referred to collectively as the Lewmar Defendants) filed Motions to Dismiss for Lack of Personal Jurisdiction and Forum Non Conveniens. In both actions, this Honorable Court allowed leave to conduct jurisdictional discovery in order to respond to the Defendants’ Motions.

Herein, JANE DOE and John Doe jointly respond to the Lewmar Defendants’ Motions to Dismiss, D.E. 48, 49 & 50, which deal with JANE DOE’s claims, and D.E. 51-53, which deal with JOHN DOE’s claims. Lewmar’s Personal Jurisdiction and Forum Non Conveniens arguments as to JANE DOE and John Doe’s claims are identical. As such, the instant response relates to all six (6) of the aforementioned motions.[2]

A brief explanation of the various Lewmar entities is warranted. Lewmar is a sailboat and powerboat hardware supplier for the leisure marine industry. Lewmar designs and manufactures a range of anchor windlass, bow thrusters, hatches and port lights, sailboat hardware, winches & steering. Lewmar and/or its wholly owned subsidiaries have been transacting business throughout Florida and the United States for decades. The prior iteration of Lewmar Inc. (International Marine Marketing) was authorized to conduct business in Florida since as early as 1995. Exhibit 2. Also, another wholly owned Lewmar subsidiary called Seco South was located in Florida from 2000-2007. Exhibit 3. Lewmar Inc. withdrew from FL in 2003. Exhibit 4. In 2007, the Seco South entity was purchased by the management of the company. Exhibit 5. Since then, the Lewmar Defendants have continued to do substantial and continuous business throughout Florida. As such, Lewmar’s Florida Connection goes back decades.

To give further detail regarding the three Lewmar Defendants, Defendant Lewmar Marine Ltd. (Parent), located in Scotland, is the ultimate parent company of the two other Lewmar defendants, namely Lewmar Ltd. (UK) and Lewmar Inc. (US).

Defendant Lewmar Ltd., located in the United Kingdom, is a wholly owned subsidiary of Lewmar Marine Ltd. Lewmar Ltd. designs, manufactures, distributes and sells equipment to the leisure marine industry.

Defendant Lewmar Inc., located in Connecticut, is also a wholly owned subsidiary of Lewmar Marine Ltd. Like Lewmar Ltd., Lewmar Inc. designs, manufactures, distributes and sells equipment to the leisure marine industry; and Lewmar Inc. is the exclusive distributor for Lewmar Ltd. in the United States. Lewmar Inc. sells Lewmar products throughout the U.S., including through 270 retailers across Florida. See Exhibit 6, Lewmar Inc. (US) Answer to Interrogatory #13 and exhibit B to said interrogatories.

In short, the Lewmar Defendants’ Motions to Dismiss can be summarized as follows. First, Lewmar Ltd. (UK)[3] and Lewmar Marine Ltd. (Parent) both argue that Personal Jurisdiction does not exist in Florida because they do not engage in business in Florida. Second, they argue that they do not exercise sufficient control over Lewmar Inc., such that the activities of Lewmar Inc. (US) should not be imputed to the other Lewmar Defendants for purposes of analyzing Personal Jurisdiction.

Importantly, Lewmar Inc. (US) does not contest Personal Jurisdiction in Florida, but moves to dismiss the matter to Antigua for forum non conveniens (which the other Lewmar Defendants join).

After substantial time and expense have been incurred in conducting discovery, including depositions in Connecticut and the United Kingdom, it has become apparent that Lewmar’s Motions to Dismiss are devoid of merit, so much so that sanctions should be entered against the Lewmar Defendants, including attorney’s fees and costs.[4]

As fully explained below, the records facts succinctly place the Lewmar Defendants within the ambit of various sections of Florida’s Long Arm Statute.

First, Lewmar Ltd. (UK) falls squarely Florida Statute § 48.181(3) because Lewmar Inc. (US) is the exclusive distributor for Lewmar Ltd. (UK) throughout the United States. Exhibit 7. And it is undisputed that Lewmar Inc. sells Lewmar Ltd. (UK) products throughout Florida through a staggering 270 retailers. Exhibit 6. And the record evidence shows that said Florida sales have averaged roughly $5,000,000 USD, for each of the past six (6) years. See Lewmar Inc.’s Answer to Supplemental Interrogatory, attached as Exhibit 8. Consequently, pursuant to Florida Statute § 48.181(3), Lewmar Ltd. (UK) is conclusively presumed to be engaged in substantial and not isolated activity within Florida, which satisfies the test for General Personal Jurisdiction and Minimum Contacts.

In sum, Lewmar’s arguments regarding Lewmar Inc.’s (U.S.) status as a “stand alone” corporation are false and/or fraudulent. All of the Lewmar entities should be considered one and the same for the following reasons:

– The deposition testimony revealed the Lewmar entities have identical goals and interests, and that everything Lewmar Inc. (US) does is for the benefit of the Lewmar Marine Ltd. (Parent).
– Lewmar Marine Ltd. charges a substantial and significant “management fee” to manage both subsidiaries.
– CEO Peter Tierney tightly controls the entire Lewmar organization. From when he first took over and downsized the entire company by nearly 50%, up to the present where he has the authority to hire and fire anybody he chooses. Plus, everyone in the organization reports to Tierney.
– There are no contracts or agreements spelling out the relationship between the Lewmar entities.
– There are no meetings of the Board of Directors of Lewmar Inc. (U.S.)(despite the requirement per its bylaws).
– The Board of Directors are virtually identical across the Lewmar entities.
– The Lewmar entities file consolidated Annual Reports.
– Lewmar plays ‘fast and loose’ with corporate names, titles and addresses; and
– All of the Lewmar entities are financed by the same Banking Agreement(s).

In short, like CEO Peter Tierney repeatedly stated, Lewmar is a single company.

In addition, the record evidence has revealed that while Lewmar Ltd.’s Affidavit states “Lewmar Ltd. does not conduct business in the State of Florida,” in fact, Lewmar Ltd. (UK) has an ongoing contractual relationship with a Florida based entity, wherein Lewmar Ltd. agreed to Florida Law and a Florida venue; and represented that it had a United States address.

As to Lewmar Inc’s forum non conveniens challenge, it is devoid of merit as there is simply no connection to Antigua. There are no witnesses, no evidence and no reason for the case to be litigated there. Conversely, there are numerous reasons the claim should remain in Florida.

Furthermore, from a big picture perspective, granting either the motion to dismiss for lack of jurisdiction or motion to dismiss based on forum non conveniens would create a logistical nightmare. The Petition for Limitation of Liability case was filed in this Court which required that the claimants file their claims in Limitation proceeding. None of claimants nor the vessel owner have requested a dismissal of any type. The Lewmar entities which are defendants and cross defendants have moved to dismiss, however their liability is closely intertwined with the facts of the accident for which limitation was filed. If the actions were to be split and sent to a different location, that would result in the same facts being presented and tried twice in two different locations which would be a huge waste of the litigants and court’s time. Thus, from a practical perspective, there should be one litigation which is this action. Also, the expense involved with respect to the claimants proving up their extensive injuries and damages with multiple experts, in multiple forums, would be enormous as a practical matter.

II. Motion to Dismiss standard regarding Personal Jurisdiction

Well established law directs this Honorable Court to undertake a two-step inquiry to determine whether the exercise of personal jurisdiction over a nonresident defendant is proper. First, the Court determines whether the state’s long-arm statute provides jurisdiction. Internet Solutions Corp. v. Marshall, 557 F.3d 1293 (11th Cir. 2009). Only where the long-arm statute provides jurisdiction does the Court proceed to the second step and determine whether “the defendant ha[s] minimum contacts with the forum state” and, if it does, whether the district court’s exercise of jurisdiction over that defendant would “offend traditional notions of fair play and substantial justice.” Id. at 1295-96.

Florida’s long-arm statute “bestows broad jurisdiction on Florida courts.” Internet Solutions Corp. v. Marshall, 39 So.3d 1201, 1207 (Fla.2010). The Florida long-arm statute provides two bases for the exercise of personal jurisdiction: specific and general jurisdiction. Specific jurisdiction refers to “jurisdiction over causes of action arising from or related to a defendant’s actions within the forum.” Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220 n. 27 (11th Cir. 2009). In contrast, general jurisdiction refers to the power of the forum state to exercise jurisdiction in any cause of action involving a particular defendant, regardless of where the cause of action arose. Id. Herein, JANE DOE and John Doe argue, in the alternative, that both general and specific jurisdiction exist.

In addition, as an alternative basis for personal jurisdiction, Claimants rely on Federal Rule of Civil Procedure 4(k)(2), which, in cases where a defendant is not subject to jurisdiction in any state’s courts of general jurisdiction, authorizes a district court to “aggregate a foreign defendant’s nationwide contacts to allow for service of process provided that two conditions are met: (1) plaintiff’s claims must ‘arise under federal law,’ and (2) the exercise of jurisdiction must ‘be consistent with the Constitution and laws of the United States.'” Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291 (11th Cir. 2000).

As such, Claimants argue, in turn, each basis for personal jurisdiction over the Lewmar Defendants. Nonetheless, despite the fact that Claimants make several different arguments regarding personal jurisdiction, controlling precedent is clear that the activities of Lewmar should be considered collectively to determine whether Lewmar has engaged in a general course of business activity in Florida for pecuniary gain. Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir. 1996) (quoting Dinsmore v. Martin Blumenthal Assocs., Inc., 314 So. 2d 561, 564 (Fla. 1975)).

III. General Jurisdiction

Claimants JANE DOE and John Doe set out three different arguments regarding General Jurisdiction. The first two arguments center on the relationship/connection between the foreign Lewmar Defendants and the U.S. based Lewmar Defendant (Lewmar Inc.). The third argument focuses on the foreign defendants’ direct contact(s) with Florida and/or the U.S.

The first argument is based on Florida Statute 48.181(3), which deals with nonresident defendants utilizing distributors to sell goods in Florida. The second argument is based on the controlling precedent of Meier v. Sun Int’l Hotels, 288 F. 3d 1264, 1272-73 (11th Cir. 2002). Importantly, both arguments turn, at least in part, on the amount of control the nonresident defendant has over the distributor and/or subsidiary. Equally important, as explained below, the different arguments require different amounts of control.

The instant issue before this Honorable Court is resolved by two Florida Statutes. First, Florida’s ‘General Jurisdiction’ Long Arm Statute, §48.193(2)(2011) provides:

A defendant who is engaged in substantial and not isolated activity within this state, whether such activity is wholly interstate, intrastate, or otherwise, is subject to the jurisdiction of the courts of this state, whether or not the claim arises from that activity. (Emphasis added).

Second, Florida Statute §48.181(3)(2011):

Any person, firm, or corporation which sells, consigns, or leases by any means whatsoever tangible or intangible personal property, through brokers, jobbers, wholesalers, or distributors to any person, form, or corporation in this state is conclusively presumed to be both engaged in substantial and not isolated activities within this state and operating, conducting, engaging in, or carrying on a business or business venture in this state.[5]

Herein, Lewmar Ltd. (UK) falls squarely under this statute. It is undisputed that Lewmar Inc. (US) is the exclusive distributor for Lewmar Ltd. (UK) in the United States. See Deposition of John Harsh, attached as Exhibit 7, p. 33, line 23. And it is also undisputed that Lewmar Inc. sells Lewmar Ltd. (UK) products throughout Florida through a staggering 270 retailers. Exhibit 6. And the record evidence shows that said Florida sales have averaged roughly $5,000,000 USD, for each of the past six (6) years. See Lewmar Inc.’s Answer to Supplemental Interrogatory, attached as Exhibit 8. Accordingly, pursuant to these two Florida Statutes, Lewmar Ltd. (UK) is conclusively presumed to be engaged in substantial and not isolated activity within Florida, which satisfies the test for General Personal Jurisdiction and Minimum Contacts.[6]

To this point, the Florida Supreme Court in Dinsmore v. Martin Blumenthal Assoc., Inc, 314 So. 2d 561, 564 (Fla. 1975)(emphasis added) held “[i]f Fla. Stat. § 48.181 (3) is complied with, even a single sale, consignment or lease raises a conclusive presumption that the defendant is operating, conducting, engaging in or carrying on a business venture in this State.” Herein, there is far more than a single sale, as Lewmar Inc. sells millions of dollars annually throughout Florida.

To the issue of control, Florida courts interpret §48.181 to require a plaintiff to show that the defendant “has some degree of control over the broker or control over the [property] in the hands of the broker.” N. Ins. Co. of New York v. Constr. Navale Bordeaux, 11-60462-CV, 2011 WL 2682950 (S.D. Fla. July 11, 2011); citing Dinsmore v. Martin Blumenthal Associates, Inc., 314 So.2d 561 (Fla.1975). Herein, as set forth below, Lewmar Ltd. (UK) has the required amount of control over Lewmar Inc., (U.S.) its exclusive U.S. distributor.

B. CONTROLLING PRECEDENT ESTABLISHES THAT LEWMAR INC.’S BUSINESS SHOULD BE VIEWED AS THAT OF THE PARENT FOR PURPOSES OF PERSONAL JURISDICTION.

Claimants’ second argument regarding General Jurisdiction deals with the relationship between all three Lewmar Defendants and argues that the pervasive U.S. and Florida contacts of Lewmar Inc. (US) should be viewed as that of the non-resident Lewmar Defendants.

The Lewmar Defendants argue that the wholly owned U.S. subsidiary Lewmar Inc. is a “stand alone corporation,” such that Lewmar Inc.’s business contacts throughout Florida and the United States do not count towards the allegedly foreign Lewmar entities. The controlling precedent of Meier v. Sun Int’l Hotels, 288 F. 3d 1264, 1272-73 (11th Cir. 2002), frames the law on this issue:

Generally, a foreign parent corporation is not subject to the jurisdiction of a forum state merely because a subsidiary is doing business there. Internal citations omitted. “On the other hand, if the subsidiary is merely an agent through which the parent company conducts business in a particular jurisdiction or its separate corporate status is formal only and without any semblance of individual identity, then the subsidiary’s business will be viewed as that of the parent and the latter will be said to be doing business in the jurisdiction through the subsidiary for purposes of asserting personal jurisdiction.”

…The court may extend jurisdiction to any foreign corporation where the affiliated domestic corporation “manifests no separate corporate interests of its own and functions solely to achieve the purpose of the dominant corporation.”

Herein, pursuant to Meier, the Claimants ask this court to view the contacts of Lewmar Inc. (US) as that of the parent and/or sister corporations (Lewmar Ltd. (UK) and Lewmar Marine Ltd. (Parent)) for purposes of determining the issue of personal jurisdiction.

Further to this point, a corporation which engages in substantial activity in a state through a subsidiary is subject to personal jurisdiction in Florida. Universal Caribbean Establishment v. Bard, 543 So.2d 447, 448 (Fla. Dist. Ct. App. 1989). To determine whether a foreign corporation is liable based on a subsidiary’s substantial activity, the court is to consider the ownership of the subsidiary, the business activities of the subsidiary, and the financial relationship between the corporation and the subsidiary. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264 (11th Cir. 2002).

Furthermore, because “the mere presence of a wholly owned subsidiary is insufficient to form a basis for the assertion of personal jurisdiction,” one of the factors to be considered is the amount of control exercised by the foreign corporation. State of Florida v. American Tobacco Co., 707 So. 2d 851, 854-55 (Fla. Dist. Ct. App. 1998). To establish an agency relationship, the foreign corporation must exercise such control that the subsidiary’s sole purpose for existence is to accomplish the aims of the foreign corporation and there is no evidence of separate interests. Id. at 855. A foreign corporation will be held subject to personal jurisdiction, however, if the subsidiary is a “mere instrumentality.” Meier, 288 F.3d at 1273.

Herein as the following subsection establishes, the record facts reveal that the Lewmar Defendants are effectively ‘one and the same’ and that the foreign Lewmar entities exercise the required amount of control over Lewmar Inc. (U.S.), so as to fall squarely under Florida Statute § 48.181(3) and Meier.

C. Regarding the issue of control, the record facts regarding the relationship between the Lewmar Defendants fall squarely under Florida Statute 48.181(3) and Meier.

Herein, the CEO and Chairman of Lewmar Marine Limited, the ultimate parent company, makes clear that Lewmar Inc. is merely an agent through which the other Lewmar Defendants conduct their business in the U.S. As Tierney testified:

Q. You would agree with me that essentially both Lewmar Inc. and Lewmar Limited have the same goals and the same interests which would be to sell Lewmar or Navtec products, correct?
MS. HOELLE: Object to the form of the question insofar as it calls for any legal
conclusion. You can answer.
THE WITNESS: Both of the operating companies, their objectives would include
selling Lewmar and Navtec products.

BY MR. WINKLEMAN:Q. Right. I mean, essentially, they are in different locations, but they have the same goals, the same interests, which are to sell Lewmar or Navtec products; agreed?
MS. HOELLE: Same objection.
THE WITNESS: Agreed.

Q. Okay. Does Lewmar Limited do any direct sales to the United States?A. No.Q. You would agree that it’s all done by virtue of its relationship with Lewmar Inc.,correct?A. Correct.
Deposition of Lewmar Marine Ltd. Corporate Representative, Peter Tierney, attached as Exhibit 9, p. 75-76.
Tierney was later asked:Q. …does Lewmar Inc., the US operation, does it undertake any other business other than that of Lewmar’s business, and when I say Lewmar’s business, I mean Lewmar as a whole?
MS. HOELLE: Object to the form, improper predicate. You can answer.
THE WITNESS: I think it goes back to the answer that I gave earlier on, that one of the distinctions that the Lewmar Inc. business has is that it is the design house and the manufacturing house for the Navtec[7]/a> product range which is something that exists only in the Inc. business.

BY MR. WINKLEMAN:Q. Right. But ultimately that’s for the ultimate benefit of the Lewmar companies, correct?
MS. HOELLE: Same objection. You can answer.
THE WITNESS: Yes, it is.
Tierney Deposition, p. 101-102.
Tierney’s admissions make clear that the facts herein fall squarely under Meier and that Lewmar Inc. is merely an instrumentality through which the foreign Lewmar Defendants conduct business in Florida and throughout the United States. And also that Lewmar Inc. (US) manifests no separate interests apart from that of the parent and/or sister company.
Tierney’s admissions are just the tip of the iceberg as there are numerous other reasons that Lewmar Inc. (US) is but a mere instrumentality of the foreign Lewmar defendants; and that Lewmar Inc. (US) manifests no separate individual identity from the foreign Lewmar Defendants. Each of these reasons shows that the foreign Lewmar Defendants exercise adequate control over Lewmar Inc. (US).

–The fact that Lewmar Marine Ltd., the parent company, charges a substantial “Management Fee” to both Lewmar Inc. (US) and Lewmar Ltd. (UK) conclusively shows that the parent exercises significant control over its subsidiaries.

Any doubts as to whether Lewmar Marine Ltd., the Parent company, exercises adequate control over the U.S. subsidiary should be resolved by the “Management Fee” charged by the parent to both subsidiaries: Lewmar Inc (US) and Lewmar Ltd. (UK). This substantial management fee (which averaged nearly one million U.S. dollars per year from 2006-2011; see Exhibit 10; Lewmar Marine Ltd’s Interrogatory Response #8.) is the only source of revenue for the parent. This substantial and significant management fee can only be reasonably construed to show that the parent exercises substantial and significant control (or management)

* Disclaimer required by the Florida Bar: The numbers above are the gross recoveries, before deduction for attorneys fees and expenses. Most cases result in a lower recovery. It should not be assumed that your case will have as beneficial a result.